Super Snowboards Inc. manufactures skis and snowboards. The company just completed its year end to June 30, 2019. The departments are divided by its three products lines. Until last year, they produced only two established products, Extra-smooth skis and Super-slide snowboards. In July 2018 it introduced Extreme-fit snowboards' launch was successful but had next expected the results to be so impressive. The product immediately became the company's most profitable, representing more than 40% of SSI's gross profit. As a result, CEO is wondering whether SSI should shift its sales and production focus to Extreme-fit snowboards.

The CEO says "Our new product launch was successful, however, I am disappointed to see the decreased gross profit from Extra-smooth and Super-slide last year. The Extra-smooth manager says the financial results don't make sense as the department produced and sold 4000 more units than in the previous year. The sales volume did not decline, yet gross profit has fallen by more than half. The cost of direct materials and the hourly rates of the employees, yet gross profit has fallen by more than half. The cost of direct materials and the hourly rates of the employees have increased slightly this year, but I thought we had increased the selling price enough to compensate these increases.

The CEO says based on the current demand we can't meet all of it with our current capacity. I think we should drop production of Extra-smooth and Super-slide and focus on Extreme-fit in the long term.

Required: CPA, please prepare a production plan that would maximize the overall profit for SSI and let me know which product we should actually focus on.

Appendix I:

	Extra-smooth	Super-slide	Extreme-fit	Total
Total Sales	$3,008,750	$4,635,000	$1,437,500	$9,081,250
Direct Materials	$544,688	$927,000	$381,225	$1,852,912
Direct Labour	$551,950	$880,650	$87,400	$1,520,000
Manufacturing Overhead costs (Note 1)	$1,452,500	$2,317,500	$230,000	$4,000,000*
Gross Profit	$459,613	$509,850	$738,875	$1,708,338

Unit Information:

	Extra-smooth	Super-slide	Extreme-fit
Number of units produced and sold (Note 2)	20,750	25,750	11,500
Price per Unit	$145.00	$180.00	$125.00
Direct Material cost per unit	$26.25	$36.00	$33.15
Direct Labor cost per unit	$26.60	$34.20	$7.60

Direct Labour hours required per unit	1.4	1.8	0.4
Machine Hours required per unit (Note 3)	1.5	1.5	2.5
Demand forecast per year (units) (Note 4)	25,000	30,000	27,000

Notes:

1. Manufacturing overhead costs (MOH) amounted to $4,000,000, which is a $750,000 increase from the previous year. The increase was caused by costs for equipment dedicated to the new product. These costs are allocated to the products based on direct labor hours. (The amount of MOH is a rounded number.)

2.SSI holds no inventory since it manufactures on the basis of orders received.

3. Maximum capacity is $100,000 machine hours.

4. The sales team estimated that the unit demand will increase as shown in the table and will remain the same for the next five years.

Comment: SSI wants to know which product is the most profitable and which is the least to help make their division of whether they should drop the Extra-smooth and Super-slide divisions.